Renting in Italy is an excellent alternative to buying. It’s more flexible, requires less of a commitment and if you find your situation changes, you can move on with the little problem. In fact, over 50% of people that plan to move to Italy decide to rent first.
However, you may not be surprised to learn that renting in Italy is very different from North America. Most of our foreign clients think that they can just find a property they like within their budget, tell the owner they want to rent it, sign a lease, pay the deposit and get the keys.
Not so fast.
Like almost everything in Italy, renting is not purely transactional. Owners may offer a property for rent, but this doesn’t mean that they will rent it to “you”. They need to be convinced that you will be a good renter, pay your rent on time and take care of the property. Since you are a foreigner, Italian owners feel nervous that if something bad happens, they would have little chance of recovering any damages compared to if they rented to an Italian.
This fear can make convincing owners that you are a reliable and honest renter quite difficult, especially if you do not speak Italian. So, owners rely on other ways to protect themselves and their properties from non-paying renters including requesting higher than normal deposits or bank guarantees, which can take the average renter out of the game.
Renting on the surface may seem like a more affordable option when looking for a new home in Italy, but because of the worry of the owners, the amount of up-front cash you will need just to get the keys in hand can be a problem if you are not prepared.
Let’s look at the more common costs for new renters and see what you can expect to pay to get started.
Agent Fees: Commission equal to one month’s rent
You will almost always need the help of a rental agent, especially if you are renting in a city. Sometimes you may luck into a property that is owned by a friend of a friend that you trust, and you can organize everything yourself. But unless you speak Italian well and have a good understanding of the process, you will likely need the help of a professional.
Rental agents in Italy typically charge a commission equal to one month’s rent. In some cases, like Rome, it’s 1 ½ and can be as high as 20% of the annual rent in the North.
Property Finders: From 500 euro +
You may also need the help of rental assistance/property finder, which is an agency that helps to search for properties and negotiate the lease on your behalf. This is a great way to ensure that you are well taken care of and have the support you need. These fees can start from 500 euro or more, but it is well worth it to ensure you are well protected.
Most owners will require a minimum of two (2) months deposit, in some cases three. It is worth trying to negotiate this amount down to as low as you can as it can add up quickly. The deposits are never used in exchange for the last few months of rent but held until you depart, and the owner can check that everything is ok.
Lease Registration Fees
All leases need to be registered in Italy and if you need the rental to form part of your Visa application this is a must. There is a special tax break for owners in Italy called the Dry Coupon which means that the owner will get a reduction in their income tax if they elect to use it. 99.9% of owners will elect the dry coupon which also means there is no registration fee. If you have the .1 owner that decides not to use dry coupon, the tax office will charge about 1-2% of the annual rent in a registration fee. You will share this cost 50/50 with the owner.
What? Yes, often if you see a property that is described as “unfurnished” this usually means that you need to put in the kitchen. This is common in Italy and kitchens can be purchased relatively cheap – from 500 euro including appliances. Of course, you can go all out and spend thousands, but likely one of the stock kitchens will do. When you leave, you take it with you or sell it.
If you are renting a property that is unfurnished (with a kitchen) you will need to budget for beds, pots, pans etc. Although these things are not as expensive as in North America, they can seriously add up. If you can find partially furnished, this will be best.
Utility Set Up
Since you are a new arrival, you will likely have to pay a deposit at each of the utility companies to open a new account. These vary depending on the company from 50 euro to several hundred. Be sure to tell the utility company that you will be a resident, so you get the lower rates.
Guarantees (The Fideiussione)
You will see and hear this term if you are planning to rent in Italy as more owners are demanding that you have this guarantee in place before they will sign a lease with you.
The Fideiussione is protection for the owner if you do not pay the rent. It is a guarantee given by a bank or insurance company based on the rental agreement and if you stop paying rent, the owner is covered. There are two kinds, Fideiussione Bancarea and Fideiussione Assicurativa.
The Fideiussione bancaria can only be issued by an Italian bank and you will need to open an account. Then you must deposit the full amount requested by the owner into the account. This can be between six to twelve months’ rent (6 months is the norm).
This money is then frozen in the account for the duration of your lease as a guarantee to the owner that if you do not pay rent, he or she can write to the bank to execute the guarantee and release the funds.
This guarantee is usually required for the duration of your lease, so the funds will be frozen in the account for the full lease term or as long as you stay. You will earn a tiny bit of interest but not enough to even count.
You cannot use this money, you cannot show it as an asset or borrow against it, it is frozen in time and there in case you don’t pay your rent. Obviously not a great scenario.
You will then continue to pay rent each month, in addition to keeping this money in the bank.
The process to obtain a Fideiussione bancaria is long (30-60 days) and requires a lot of documents and paperwork. You will have to first agree to the rental terms and the owner will have to write a proposal for rent which the bank will require to make the guarantee. If you are a new arrival, it will be practically impossible to set this up, so it is better to search for a property where the owner does not require one.
Fideiussione Assicurativa per Affitto
Some owners will agree to a different kind of guarantee called a Fideiussione Assicurativa Affitto.
The function is the same, it protects the owner if you don’t pay rent and, in this case, the owner can get the money from the Insurance Company. However, it is a little more difficult and time-consuming for them and therefore not the preferred way for an owner.
This is obviously a better option for the renter as it doesn’t require large deposits into a bank but instead, you will just pay an insurance premium.
The amount you pay will depend on several things and qualifying is challenging for new arrivals. The process can be long (resembling a mortgage) and requires many documents to prove your financial position, whether you can qualify for the rent, and your level of risk. Again, it is better to search for a property that does not require any guarantees except for deposits.
So, let’s see how that all looks financially. Below is a common scenario for estimated costs to rent a one-bedroom apartment for €1000 in the center of Florence, Tuscany with and without a fideiussione bancaria. This will not include buying any furniture or a possible kitchen.
These costs are only to secure the apartment with a lease and keys in hand.
- €1000 Deposit upon offer acceptance (1 month)
- €2000 Damage Deposit upon signing of the contract (3 months with deposit credit)
- €1000 First month rent
- €1000 Agent commission 1 month rent
- €200 Set up fees for new utilities
- €6000 Six month Fideiussione bancaria (rental insurance if required)
- €180 Fideiussione bancaria bank fees (charged at 3% of the balance per year)
Total cash output to get the keys in hand €11, 380 (with Fideiussione bancaria) or €5,380 without
There is a big difference, so it is always best (and likely a necessity) to find an owner that does not require a bank guarantee.
Now let’s take a quick look at your housing expenses for the same one-bedroom apartment in Florence. Keep in mind this will vary with each region as utilities will be different, but it will give you a good idea of what expenses you will incur.
Monthly operating costs for a furnished one bedroom 650 sq ft apartment in the centre of Florence,
- €1000 rent
- €50 condo fee (this may increase if there is an elevator and common heat in the building)
- €65 Utilities Gas month (average across the year)
- €45 Electric per month (average across the year +)
- €45 tv tax per year
- €30 Water per month (average across the year)
- €35 Garbage tax (about 420 for 2 people) per year
- €30 Internet per month
Total monthly expenses approx. €1300 per month. This may vary depending on your utility usage and building fees, but you get the idea.
If you plan on renting in Italy, you should be prepared to set aside a minimum of 6 x your rental budget to cover the rental fees, commissions, deposits, and first month’s rent. It is possible to reduce the start-up expenses but plan for the maximum so you are prepared.
Is renting better than buying?
This really depends on your personal situation, your available cash (as mortgages for foreigners are very difficult), and your commitment level to your new life in Italy. Renting can be an excellent first option to test the waters, have a base to discover other regions in your own time, and decide what you really want and need to make you happy.
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